Learn how Medicare IRMAA works, how to avoid costly surprises, and when paying a little more in premiums can actually lead to major long-term tax savings.
Imagine this: you’re enjoying retirement, your income feels steady, and then you receive a letter from Medicare.
Your Part B premium — normally about $175 a month — is jumping to over $240.
You haven’t changed your coverage. You haven’t added services.
What happened?
You tripped IRMAA — an income-related adjustment that increases your Medicare premiums two years after your income crosses certain thresholds.
For most retirees, this comes as a surprise. But it doesn’t have to.
IRMAA stands for Income-Related Monthly Adjustment Amount.
It’s an extra charge added to your Medicare Part B and Part D premiums if your income exceeds specific levels.
The calculation is based on your Modified Adjusted Gross Income (MAGI) from two years prior.
That means your 2024 income determines your 2026 premiums.
Here are the 2024 thresholds for Part B(these are adjusted each year):
Married Filing Jointly:
(Singles face the same tiers at roughly half those income levels.)
Many people enter retirement with predictable income — pensions, Social Security, investment withdrawals — and assume Medicare premiums will remain stable.
Then one of these events happens:
Two years later, IRMAA shows up — often without warning.
“IRMAA surprises don’t come from bad planning — they come from no planning.”
Avoiding IRMAA at all costs isn’t always the best goal. Sometimes, paying more in the short term leads to bigger lifetime savings.
Here are three times it can make sense:
Converting IRA money to a Roth creates taxable income that may trigger IRMAA for a year or two.
But in exchange, you permanently remove that money from future RMDs and future taxation.
Example: a couple converts $100K each year for three years.
They pay about $800 extra per year in IRMAA premiums — roughly $2,400 total.
But those conversions reduce future RMDs by $8,000 a year, lowering lifetime taxes by thousands.
That’s a trade most retirees would make every time.
After one spouse passes, the survivor files as single, often doubling their effective tax rate on the same income.
Doing partial conversions or capital-gain harvesting together while still filing jointly — even if it triggers IRMAA — can protect the survivor from higher taxes later.
Leaving Roth IRAs to heirs allows them to withdraw tax-free for up to 10 years.
Paying a temporary IRMAA bump today can save children or grandchildren thousands in future taxes.
You can’t eliminate IRMAA entirely, but you can forecast and control it.
Here’s how:
Remember: your 2025 income determines your 2027 premiums.
Whenever you make a big financial move, ask: “What does this mean two years from now?”
Instead of a single large Roth conversion, spread it across multiple years.
Target the top of your current tax bracket (e.g., 22%) without spilling into the next IRMAA tier.
If you’re selling property or realizing gains, try to do so before age 63 — two years before Medicare eligibility — to keep those gains out of your first IRMAA calculation.
Pair conversion years with:
Each fall, review the updated Medicare brackets.
Even small changes in taxable income — interest, dividends, RMDs — can push you over a line.
An annual tax projection keeps you in control.
Tom (70) and Lynn (69) live in Cedar Falls and are in their first full year of retirement.
Their advisor suggests converting $120,000 from Tom’s IRA to a Roth.
They’ll cross into the first IRMAA tier and pay about $960 more in Medicare premiums for the next year.
They decide to move forward.
That conversion lowers their future RMDs by roughly $4,000 per year and creates a Roth balance that will grow tax-free for life — and pass tax-free to their two kids.
IRMAA shouldn’t be feared — it should be forecasted.
It’s simply a reflection of your income choices.
Sometimes it’s a warning sign to plan better; other times, it’s proof you did plan better — converting, rebalancing, and preparing for a more flexible, tax-efficient future.
At Ignite Financial, we help retirees in and around Iowa design tax-smart retirement income plans that minimize surprises and maximize control — even when the IRS or Medicare rules change.
Avoiding IRMAA surprises doesn’t mean avoiding opportunity.
A quick review now can help you stay below unnecessary thresholds — or confidently pay a little more today to save much more later.
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Schedule your Medicare & Tax Review — we’ll model your next few years of income and show where IRMAA fits into your broader plan.
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IRMAA stands for Income-Related Monthly Adjustment Amount.
It’s an extra charge added to your Medicare Part B and Part D premiums if your income exceeds certain thresholds.
The higher your income, the higher your monthly premium — but it’s based on Modified Adjusted Gross Income (MAGI) from two years earlier.
For example, your 2025 income determines your 2027 Medicare premiums.
Anyone enrolled in Medicare whose income is above the federal thresholds.
In 2025, that’s $206,000 for couples filing jointly and $103,000 for singles.
Only about 8–10% of Medicare beneficiaries currently pay IRMAA, but more retirees hit it each year as incomes and conversions rise.
It’s usually from income changes two years ago — not something you did this year.
Common causes include:
A one-time income spike can trigger IRMAA for a year or two unless planned for in advance.
Yes.
If your income dropped due to a life-changing event — such as retirement, marriage, divorce, or the death of a spouse — you can file Form SSA-44 with the Social Security Administration to request a reduction.
If your income simply fluctuated from normal investment activity, appeals are less likely to succeed.
You can’t always avoid IRMAA completely, but you can plan around it:
Yes — when it’s part of an intentional strategy.
Paying a temporary IRMAA surcharge after a Roth conversion can help:
Yes.
If your income falls below a threshold, your premiums will return to the standard rate the following year (after the next recalculation).
That’s why monitoring your income annually is key — IRMAA isn’t permanent.
No.
Iowa doesn’t tax Social Security or Medicare benefits, and IRMAA itself isn’t a tax — it’s an adjustment to your federal Medicare premium.
Still, planning for it is essential to keep your total retirement expenses predictable.